Chapter 23: Turning Soft Data Into Hard Data (And Ultimately Into Impact)

Soft data funnelUp to this point we have been discussing how to measure problems, how to define problems, how to determine what a favorable end result would be, what the value of that end result would be, and what that value would be over time. In Chapter 22: Turning Financial Analysis Into A Value Discussion, we took some very simple round numbers from Hard Data and had a discussion with our client to hopefully create an understanding that there is a problem worthy of a cost-effective solution. Ready to sell now? Hold on – there is another type of data that we need to talk about:  Soft Data.

Soft Data is by nature hard to quantify and put into a measurable ROI. If your customer wants to increase security in their building, create an environment that attracts better employees, elevate their position in the marketplace, or foster better teamwork, you are going to have a hard time turning this type of general statement into actionable data. While it will always be more difficult to uncover and quantify Soft Data and how it affects the problems and potential solution, there are ways to increase the clarity of the situation.

We all have heard, simply put, that customers buy to either increase the good or decrease the bad. Sometimes a solution will address just one of these, but more often it will impact both good and bad issues (for example, an exercise program will increase your fitness and decrease your weight). For our purposes here, let’s look at these as two distinct situations.

If your prospect is focusing on increasing good things, you will most likely hear phrases from them that talk about the goals, objectives, accomplishments, targets, or improvements that they desire to obtain. For example, they may say that they want to improve the security in their employee parking garage. How do you measure that to create an ROI? It starts with a series of questions:

  • “If you improved security in the employee parking garage, what would that do?” (It would make our employees feel safer when they work late and have to walk to their cars in the dark)
  • “If they worked late but felt safer when walking to their cars, how would that affect your business?” (Some of our high priority projects are in danger of slipping, and we need people to work longer hours to catch up…if they felt safer walking to their cars at night, they would be more likely to work later)
  • “And if those employees worked later more often, what would the impact be on those high priority projects?” (We would complete those projects on time and we would bring in an extra $XXX dollars over YYY months into the company)

A bit simplistic? Of course, but it illustrates the process of turning Soft Data into Hard Data and ultimately into Impact. What if your prospect is focusing on decreasing bad things? If so, you will most likely hear phrases from them that talk about pain points, concerns, margin slippage, process roadblocks, or work silos that they want to diminish. While it can be difficult to get a prospect to fully unveil all of their pain points, once they are discussed, these are usually easier to measure. Let’s use the same example, except this time the prospect is saying their problem is that people are unable to work late to finish some important projects:

  • “Why don’t your employees want to work late?”  (We had some cars broken into at our employee parking garage, and now people don’t want to be in the garage when it’s late, dark, or when they are alone)
  • “Did they work late in the past, and did they feel safe then?”  (Yes, we never had a problem with employees working late until we had the car break-ins)
  • “What will it cost the company if you don’t finish these important projects?”  (It will cost us $XXX dollars over YYY months)
  • “What else could happen if the employees don’t feel safe?”  (Morale will decrease because employees will feel management doesn’t care about their safety, and ultimately, we could get sued if an employee were attacked in the garage)

This line of questioning could go on, uncovering both Hard Data (those $XXX dollars over YYY months that have a financial impact) and Soft Data (decreased morale, potential for a lawsuit, difficulty in recruiting new employees, etc.). The point is that much of the data that you thought would be hard to quantify is really an issue of your ability to drill down with a series of questions that will turn that Soft Data into Hard Data, and ultimately into Impact. The goal of course is to walk down this path of discovery with your prospect, unearthing different types of data, quantifying it as best as you can, and then helping your prospect understand the problem. A side benefit is that this process will help your prospect explain these findings to his or her colleagues who may become a part of the final decision of moving forward with your solution.

What if you uncover issues that just can’t be quantified? We’ll cover that next in Chapter 24.

 

Chapter 22: Turning Financial Analysis Into A Value Discussion

photo-30By now you may be chomping at the bit, wondering when you get to do your PowerPoint or demo.  After all, your competitors have already given their presentations, and here you are, still asking questions instead of talking features and benefits. Steady…stay on target…we’re setting the table here, not going straight to dessert.

In Chapter 21, we looked at how to turn soft, hard, or inferred data into a form of impact. The degree of financial analysis required will depend on your industry and the order of magnitude of the problem to be solved.  It is important to not get too bogged down in the early stages. Consider the problems of a traditional detailed financial cost analysis:

  1. Determine the project’s cost savings impact over 3-5 years (a guess)
  2. Determine the project’s cost over 3-5 years (another guess)
  3. Subtract #2 from #1 for the project’s total cost savings (guess – guess = guess²)
  4. Factor in the average weight of capital to the equation (the mother of all guesses)

That is a lot of guessing. And there are obviously many more steps than in this simplistic example; imagine how all of those guesses keep skewing the results! And what happens if you or your clients aren’t happy with the numbers you generated? Be honest…you most likely go back and tweak the numbers until you end up with something closer to what you were expecting.  Guessing and manipulation – that’s a recipe for disaster.

The art of getting useful results out of this process will depend heavily on how you take the exercise and turn it into a discussion, not a complete financial analysis. After all, your goal is to help your client understand the problem and its impact, help place you in the role of a trusted advisor, and of course, help you continue to qualify your prospect. Besides, if you are like most salespeople, you are not a spreadsheet genius who delights in the world of credits, debits, and pivot tables. Fortunately, if you can help your 4th grader with math homework, you have all the financial skills necessary for this phase.

In How To Take Data And Turn It Into Impact, we used the example of rekeying the locks at a university to illustrate how to create a very basic understanding of the financial impact of a problem. This type of financial analysis is obviously simple, often referred to as “back of the envelope” math. The exercise reduces the amount of guessing (or makes it obvious to you and your client that you are guessing and agree that you are using round numbers to get a general understanding of the problem). You are now in a position to take your ballpark numbers and talk about them in a way that not only starts to firm up your mutual understanding of the problem, but may also allow you to uncover additional problems that your company can solve.

You both need to work this together

Besides the obvious face time this gives you and the client buy-in it produces, it will give you additional insight into your client’s opinions, allow you to test your assumptions, and enable better, more educated guesses (yes, we’re still guessing at this point, but that’s okay). As you talk about the problem, you will need to put your findings into the language of money. After all, the solution you offer will be based on money. In the end, if your client can’t apply a viable ROI to your solution,  even the biggest problem won’t get the funding to solve it.

HP-12C

Yes, they still make the trusty HP-12C

Keep the math simple, and keep things centered on positive and negative numbers. This is not the place for percentages or ratios, and it certainly is not the place to show off your MBA skills with your trusty HP-12C calculator. If the numbers come up larger than expected, your client may start to distrust the process, even though you both contributed to that process. If this happens, take the conservative route  and say something like, “That seems a little high…is this what you were expecting?”

Pay careful attention here…you are about to either get solution buy-in or problem abandonment

If they answer that the number seems about right or might actually be underestimated, keep moving forward. If they answer that the number seems high, work with them until you both reach a conservative number that you not only believe, but can later prove to the client’s senior management who ultimately will write the check for your solution. Then ask one final question:  “Is this problem big enough to require a solution?” Because while your solution might solve a problem with an annual ROI of $100,000, that might mean nothing to a $50 billion company with other priorities.

If after all of your work together you get to the point where your client is not seeing numbers that justify moving forward, you need to take a deep breath and evaluate where you are. Should you keep pushing and try to get to a number that works? If you have been lazy with your qualifying over the past few meetings, you may be fooled into pushing forward. If you have been constantly qualifying your prospect throughout your entire engagement, you will probably see that you have reached the point where further time will not pay off. That’s a tough call, but an important one. Don’t keep trying to push that rope uphill. Move on.

But wait, not so fast. There are few absolutes in business. It may make sense to continue on with what appears to be an unqualified prospect. What if there is more to this problem’s ROI than can be easily measured financially? Just as there are soft costs, there is also soft data. We’ll look at soft data and how it impacts your client in Chapter 23.

Chapter 4: How Does Your Client Measure Success?

If you were to ask your prospect, “How will you know if this project is successful?” I’m betting that they wouldn’t know how to answer you. A study on IT system implementations showed that 37% of them failed. That means only 67% of IT projects succeeded, which in any school would be rated a “D.” Why did they fail? The study cites that the requirements for the project were unclear, resources were lacking, schedules were unrealistic, planning data was insufficient, and risks were not identified.

Does this sound like any of your past projects?

Whether you are in the IT industry or the TP industry, there are lessons to be learned here. The most important lesson is that it was, at best, only after the project was completed that thought was given to how success would be measured. As customers are (thankfully) getting smarter, more and more are learning to define the scorecard in advance to measure the success of the project.

The greatest opportunity with your prospect is to help them develop the scorecard that will be used to determine what success looks like.

What kind of measurements will your clients be using? Return-On-Investment (ROI) is a common business measurement yardstick. It is certainly one that is dear to the CFO‘s, CEO’s, and Board of Director’s hearts. If you can show your prospect that your product or service can reduce costs, increase revenue or margins, increase productivity, increase quality, or increase customer satisfaction, then you have a good chance of moving your proposal up through the organization. If you can help your contact at that company matter to the C-Suite, and help him or her enable the company to survive tough times and even grow, then that contact will start to treat you like a trusted advisor who is out to help the organization.

After you have proven yourself to be an expert and have identified the key people you need to meet and work with (Becoming An Expert In Order To Qualify Successfully, Chapter 3), you are ready to start writing the score card that will be used by your client (and hopefully forced upon your competitor). The sum of that scorecard needs to be firmly anchored in the Client Centric Sales model of win-win; it is imperative that you work together to create and supply the optimum solution to the company’s most important problems.

Win-Win is easier said than done. The most difficult part of this is that the contacts you have at your prospect’s organization will most likely not have a full understanding on how the project affects the business drivers of their company. They may have secured budget money, and may even have a specification written. The project may have been funded to solve “Problem X” which is funded for “Y dollars” for a period of “Z months,” but has a business case been developed that would enable your contact to justify the project? Are you in a position to help your prospect show the C-Suite how the proposed project is a win for them?

You probably have a good understanding of your prospect’s industry, and an even better understanding of the challenges your prospect’s company faces. You will need to identify how your product or service can address at least one of those challenges, and you will need to help your client develop the scorecard that will be used to both establish the success of the project and can be used to make sure that your competitors are being measured to the same standard.

Problems?

Many, and half of them are caused by ourselves.  We don’t listen, we make assumptions, we think of solutions that we have already sold instead of working to understand every aspect of our prospect’s business, and we assume that we are talking to the right people within that organization. But it is not all our own fault. It doesn’t help that our prospects don’t really know what they need, can’t find a way of accurately describing the problem, keep key information to themselves, won’t let us near the right people, are unrealistic about expectations, and are more concerned with company politics than end-results.

This is why you need to help write the scorecard for your project. Granted, it is not easy, and it takes a lot of time. The good news is that each step you take will help you to continually educate and qualify your prospect. In coming chapters, we will examine a simple methodology that you can use to create a concise, measurable, and justifiable scorecard that you and your prospect create together that will help put you in the driver’s seat.

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